PERCENT FIXED & INDEX

The energy landscape is changing. Is your strategy evolving with it?

There may have been a time when securing the best rate for a particular term was the key to a successful energy strategy. And that’s not surprising. Market volatility is one of the biggest risks weighing on many organizations—and locking in a fixed price for energy supply can help mitigate that risk. However, recent changes in the ERCOT market, driven by historical events like Winter Storm Uri, underscore the need to rethink whether locking in your requirements at a fixed price for a year—or two or three—is the best choice for your business.

A quick market refresher

In the past two years, energy prices have been driven up by extreme weather, increased demand, and growing inflation. As issues with the stability of the grid came into question, ERCOT, the Public Utilities Commission of Texas (PUCT), and the Texas Legislature took regulatory action, which continues today, to redesign the power market structure to ensure resource adequacy. While regulatory action was needed, it has resulted in more energy costs, through new cost components or increases to existing components. Because the planning and implementation of the new market structure continues, some cost impacts are not yet known.

What do market conditions mean to my energy strategy?

In addition to market design changes that are still uncertain, energy prices today are higher than they were pre-pandemic, and continued extreme weather patterns regularly result in peak demand and price volatility across the state. When you’re considering your energy purchasing options, you’re looking for the right balance of risk and reward. You don’t want to lock in when the market is high — or higher than it’s been — and you don’t want to be exposed to real-time prices during a peak demand week in the summer. Now is a good time to consider a flexible and more balanced approach to your energy purchases through a fully-customizable Percent Fixed and Index strategy.

How can this strategy benefit my business?

When you’re managing financial investments, you likely don’t put all of your money into one fund. Consider your energy purchasing strategy to be like a financial investment — and you may be able to benefit from diversifying your purchases. With the NRG Percent Fixed and Index strategy, you can:

• Choose exactly how much/what portions of your energy requirements you want to lock in at a fixed price and how much you’d like to settle at index rates
• Control your exposure to market rates by selecting when and how much you want to lock in, including on-peak, off-peak, and around-the-clock blocks
• Mitigate higher prices by waiting to lock in remaining load until there is a dip or sweet spot in forward prices
• Take advantage of favorable market prices by floating a portion of your energy requirements during periods of lower market rates
• Hedge against periods of extreme volatility by locking in up to 100% of your load for the summer/winter months

Percent Fixed and Index is a straightforward approach to balancing energy market risk that puts control of your energy investment into your hands. Build a better plan for your business today and worry less about energy market uncertainty tomorrow.